U.S. Senator Pushes Back Against Crypto Debanking With New Bill

The crypto industry’s fight against debanking has gained a major ally in U.S. Senator Tim Scott, who is spearheading a bill to prevent federal banking regulators from using "reputational risk" as a reason to cut off financial services. The Financial Integrity and Regulation Management Act (FIRM Act) aims to strip regulators of the ability to pressure banks into denying accounts to legally operating businesses, including those in digital assets.

Scott, the Senate Banking Committee’s chairman, argues that regulators have misused reputational risk to push a political agenda against crypto and other industries. “This legislation is the first step in ending debanking once and for all,” he stated. The bill has gained support from Republican senators, including Cynthia Lummis, a strong advocate for digital assets regulation.

The issue of crypto debanking has been widely debated, with industry leaders accusing regulators—such as the Federal Reserve, FDIC, and OCC—of systematically excluding crypto businesses from banking services. Lummis emphasized the need for clear, innovation-friendly policies, rather than regulatory overreach that stifles growth.

However, Senator Elizabeth Warren and other Democrats defend the regulators, citing past collapses, fraud cases, and security breaches in the crypto space as justification for their scrutiny. They argue that stronger oversight protects investors from market volatility and risks.

As the battle over crypto banking access intensifies, the FIRM Act could mark a turning point in regulatory policy. If passed, the bill could reshape the banking landscape for digital asset businesses, ensuring fair access to financial services.